When you hire a new employee, it’s important to know how long they will be sticking around. You can use your average turnover rate and other employee statistics to determine the health of your company and see what you need to change. Today, we'll be discussing how you can properly calculate voluntary and involuntary employee turnover rates, what employee turnover rates mean, and more.
How to calculate voluntary turnover rate
To calculate employee turnover rate for a particular number of employees, you’ll need to know the following:
- # of voluntary employee turnovers in a given period
- # of total employee hours worked in a given period
First, you’ll have to find what percentage each employee turnover is from your total employee turnover.
1 - (number of voluntary turnover/total employee turnovers) * 100 = ____% Then add up all of the percentages and divide it by 100 to get the overall turnover percentage.
1/100 + 1/100 + 1/100... = number or recurring % Over time this will give you an accurate calculation about how often your employees are leaving your company voluntarily.
To make things simple, you can use our employee turnover calculator.
How to calculate involuntary turnover rate
Involuntary turnover is typically much lower than the voluntary employee turnover rate. To calculate this employee turnover rate, you’ll need to do all of the same calculations as you did with the voluntary employee turnover rate; however, this time you’ll use involuntary employee turnovers instead of voluntary employee turnovers.
1 - (number of involuntary/total employee turnovers) * 100 = ____%
What your employee turnover rate means
Although an employee turnover rate can tell you a lot about how your business is doing, it doesn’t always mean that something bad has happened. There are times when high employee turnover rates are actually better for your company. If one person leaves your company, but a new employee fills their spot, the employee turnover rate will increase.
However, overall productivity and teamwork can also suffer from a high turnover rate because employees have to work harder and more often in order to get tasks completed, and make up for the fewer trained employees. Additionally, businesses can often suffer from a high turnover cost, have their company culture negatively impacted, and have a high employee attrition, which are all side effects found from high staff turnover. High turnover also means it’s essential to regularly update your physical access controls, such as key card entry systems, to ensure only current employees have access to your workspace. A key card entry system makes it easy to manage permissions in real time and protect your business from unauthorized access.
Reducing your employee turnover rate
To help reduce employee turnover rates in your business, you should constantly be looking for ways that you can improve employee satisfaction, employee morale, and job engagement. You might need to offer more training opportunities or provide better employee benefits, such as health insurance and 401(k)s. Using an online invoice receipt software can also simplify payroll management, ensuring employees receive timely and transparent documentation, which contributes to higher satisfaction and retention. Having an engaged workforce is one way to ensure that your employees stick around and enjoy their jobs while they’re at the office, and improve your company's employee retention rate.
Matter’s goal is to help businesses grow and retain a positive work culture, and empower good employees through praise and constructive feedback. If you found this information helpful and want to learn more about employee turnover rates, check out our comprehensive guide to employee turnover.
How to calculate employee turnover rate
The standard formula is: turnover rate = (number of employees who left during a period / average number of employees during that period) x 100. To find the average number of employees, add your headcount at the start and end of the period and divide by two.
For example, if you began the year with 200 employees and ended with 220 (an average of 210), and 21 people left during the year, your annual turnover rate is (21 / 210) x 100 = 10%.
How to reduce employee turnover
- Recognize good work. Employees who feel appreciated are far more likely to stay.
- Offer growth. Clear development paths give people a reason to build their future with you.
- Invest in managers. People often leave managers, not companies, so manager quality is pivotal.
- Pay fairly and listen. Competitive pay plus acting on feedback signals that you value your team.
Consistent recognition is one of the most cost-effective retention levers. Tools like Matter make appreciation a weekly habit inside Slack or Microsoft Teams, helping people feel valued before they start looking elsewhere.
Frequently asked questions
What is the formula for employee turnover?
Turnover rate = (employees who left / average number of employees) x 100, measured over a chosen period such as a month, quarter, or year.
What is a good employee turnover rate?
It varies by industry, but a lower rate generally signals a healthier workplace. Compare your rate to benchmarks for your sector rather than to a single universal number.
